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Strategic Information Systems: A Case Study of Commonwealth Bank of Australia

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Added on 2024/07/24

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This case study analyzes the external and internal environments of Commonwealth Bank of Australia (CBA), a leading Australian multinational bank. It examines the bank's industry, competitive landscape, and resources, identifying opportunities and threats. The study proposes a suitable information system solution, specifically a Management Information System (MIS), to address CBA's operational challenges and enhance its performance. The evaluation of the proposed system highlights its benefits and potential drawbacks, providing recommendations for successful implementation.

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TABLE OF CONTENTS
Part 1: External analysis...............................................................................................................................1
1. Business background........................................................................................................................... 1
2. What industry is it?.............................................................................................................................. 1
3. General environment analysis..............................................................................................................2
4. The industry environment.................................................................................................................... 3
5. Competitive environment.....................................................................................................................4
6. Opportunities and threats..................................................................................................................... 5
Part 2: Internal analysis................................................................................................................................6
1. the firm’s resources, tangible and intangible.......................................................................................6
2. Capabilities identification.................................................................................................................... 6
3. Core competency analysis....................................................................................................................7
4. Propose a suitable information system solution that meets the chosen company needs.....................7
5. Evaluate the proposed system and provide your recommendations....................................................8
References..................................................................................................................................................10

LIST OF FIGURES
Figure 1: Logo of Commonwealth Bank of Australia.................................................................................1
Figure 2: Economic growth in bank.............................................................................................................2

Part 1: External analysis
1. Business background
Commonwealth Bank of Australia or abbreviated as CBA is Australia based multinational bank
established by Australian government in 1911. Later in 1996, the bank was fully privatized. The bank is
among the four largest banks of the country. Today, the organization has 15.9 million customers,
800,000 shareholders and 48,900 employees. The organization has motto to provide the range of the
financial services to the people to enhance and secure the financial wellbeing of the businesses, people
and communities (About Commonwealth Bank, 2018). Today, the organization is working in several
countries of Asia, Europe, New Zealand and North America. With the time, the organization has
empowered the services and support to customers to improve the values and deliver the better
experience.
Figure 1: Logo of Commonwealth Bank of Australia
(Source: Commbank.com.au)
2. What industry is it?
Australia has a competitive, sophisticated and profitable financial sector with effective regulatory
system. The Commonwealths Bank of Australia has services in the banking sector and supporting the
people for the financial services. The banks work in financial sector under the Banking Act 1959. To
ensure the security of the systems, the government of the Australia has ensured that each institute has
guaranteed deposit of the fixed amount as $250,000 per customer to overcome the failures in bank
systems. Commonwealth Bank has achieved the first rank when Bloomberg has measure the riskless
returns (where the organization has achieved 18%). Therefore, the Australian financial sector has largest
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support in the economy as it helps national GDP with $140 billion per year. It is also the wide source of
the employment in the country (Royalcommission.gov.au, 2018).
Figure 2: Economic growth in bank
(Source: PMI survey 2017)
3. General environment analysis
The following analysis of the external environment of the Commonwealth Bank has focus on the
following factors for their effectiveness:
Economic: The organization is the fourth largest bank in the country so that it has economic strengths in
the revenue and contribution to the national economy also. For example, the organization has revenue of
$26.005 billion with 1,100+ branches and employment to 51,800 peoples in the country. It has effective
leading position with economic strengths (Cirnow.com.au, 2018).
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Physical: The organization has 4,300 and more ATM devices with multiple branches across the
Australia and other countries. The organization has effective coverage to the Australian and other
markets to achieve the competitive benefits.
Socio-cultural: The organization has uniform cultural and social values. The branches working across
the world has positive socio-cultural values to lead with profitability. The organization has people and
community at core and it helps to develop the productive and effective culture within and outside the
business.
Global: The organization has presence in the global market so that it has impact of the policies and
regulations on the business operations. However, the uniform alignment with the global market has
helped the organization to achieve the competitive benefits (Murray et al, 2014). Still, the business has
scope to increase the profitability with presence in the developing countries.
Technological: The bank systems and customer services are having effective technology to meet the
competitive advantages. The organization is using digital marketing techniques, internet banking and
customer services to engage the customers. The strength is capable to deliver more profitability to
business in future (Schlagwein et al, 2014).
Political/Legal: The proper legalization of the bank has improved operational quality and performance.
It follows most of the employment and data protection acts to ensure security of the data and resources.
Also, stable political conditions and neutral behaviour in political market are benefits to the business.
Demographic: The organization has variety of the financial services to the customers. The saving and
current accounts are effective to engage the economic income peoples whereas it also serves with
premium services including loans, cards and net banking along with wealth management.
4. The industry environment
The industrial environment of the business can be analysed with the help of the Porter’s five forces
model on the business. The each stage has own importance for the business to achieve the balance
operations for high profitability and continuance:
Supplier power: The suppliers are important for the business to manage the cost and improve the
services to the customers. For example, card manufacturers, software vendors and digital marketing
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service and data providers are major suppliers for the business. If there is effective number of suppliers
then the organization has scope to save cost whereas lower availability of suppliers can increase cost.
The organization has good set of the suppliers to achieve the continuance and trust in the business.
Buyer power: The higher bargaining power of the customers can increase the profitability whereas the
lower sales reduce the benefits. The organization has importance to occupy loyal customers for effective
business. The business has coverage to several countries with effective number of loyal customers (E.
Dobbs, 2014).
Potential entrants: However, the financial sector is growing and rapidly changing with market. The new
market entrants are appearing. For example, small financial service providers are coming in market and
impacting the business profitability. It is essential that the organization manage the quality and lead with
innovative practices.
Substitute products: The organization has most of the financial services but rapidly changing services
and products to the customers are making the market dynamic. The organization has to align the
operations with the new services and schemes to the customers to retain the position and profitability.
Rivalry among competitors: Banking sector of Australia has high competition among the institutes and
therefore, they are using dynamic approaches to achieve the competitive benefits (Rothaermel, 2015).
The organization has to improve the services to take over the rest of three banks in the country along to
manage the position from the banks lower in the rank.
5. Competitive environment
The insurances and fund providers in the country are increasing as the strategic groups and increasing
the competition in the sector. The organization has to consider the strategies and scopes of such
businesses to sustain in the market. Also, it is required to take account that the loyal set of the customer
is not impacted with dynamic and short term market strategies of fund providers. The organization has
main rivalry as ANZ, Westpec and National Australian Banks. Such organizations have main strengths
and capabilities for capital and resources (Murray et al, 2014). The skilled resources prepare the
strategies according to market changes and attract the customers whereas the firms are also more aligned
to loan the amount to the peoples. The organizations have lower interest rates but charge additional
amounts to make higher profitability than the Commonwealth Bank.
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Such organizations are threats for the business as they can block the fund management and loan services
of the organization to the customers. The customer market might be diverted from the Commonwealth
Bank if not suitable solution is emergent within effective time.
6. Opportunities and threats
Besides the strengths and weaknesses in the organization, there are several threats and opportunities for
the organization.
Threats
The organization has major threats of the new entrants in the finance and wealth management services.
The organizations can lead the poor profitability to the business along with destruction of the customer
market. Also, the dynamic strategies for loan and other funding can lead the failure of the banking
services. The business has another threat to manage the information security as the organization was in
news due to poor management and security in recent year and the continuance of such activities can
poor reputation (Rothaermel, 2015).
Opportunities
The organization has opportunities to explore the business operations to the developing countries
whereas the organization has also scope to lead with premium services to the customers in wealth
management. The loan and other interest rates on the fund providing can be reduced to attract the
market. The business has opportunities to grow and sustain with the digital services to the customers.
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Part 2: Internal analysis
1. the firm’s resources, tangible and intangible
Firm resources: There are number of resources in the Commonwealth bank which is based in the
Australia like human resources, assets, financial resources etc which help them to sustain in the market.
The main resources of the organizations are human resources who are working for the common
objectives and help the organization to achieve the goodwill in the market. It has analyzed that the bank
in the year 2017 have 51,800 human resources.
Tangible assets: Tangible in the firm will include the assets and shares of the organization which can be
seen by the organization and it is identified that bank has A$976.374 billion assets in the year 2017.
They also have a $63.716 billion total equity in the year 2017 as their resources. These are the tangible
assets of Commonwealth Bank of the Australia (Braggion, and Ongena, 2017).
Intangible: Intangible assets include the Goodwill of the Commonwealth Bank in the market which will
be calculated according to their performance in the year and their achievements in the market. The
goodwill of the bank is good that includes the satisfaction level of their customers along the employees
which help them to sustain in the market.
2. Capabilities identification
Commonwealth Bank is an Australian Bank provides financial services across Asia, the US, the UK and
New Zealand which shows that they have very strong customer base in the market. They provides
various types of the financial services in which retail business and banking institution, fund
management, insurance, superannuation or broking services and investment services are included and
that cover the internal strength and capabilities of the Bank. This is the largest Australia bank which is
listed organization on Australia securities exchange by including with some brands like- ASB bank,
Bankwest or Commonwealth security (Internal capabilities of Commonwealth, 2018).
They have skilled and experienced employees who are working for the quality of services which make
their brand value in the market and due to which they cover large market areas by their financial
services. The internal capabilities of the Commonwealth Bank is related to their multitasking services in
which they design the complex could model for IT solutions which help the organization to reduce the
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security issues along with the complex issues they are facing due to the technology failure. They also
provide effective infrastructure which reduce the maintenance cost by 40% and time consumption also
which help them to move towards new applications.
3. Core competency analysis
Core competency analysis is the management theory concept under which combination of the skills and
resources are includes which distinguish the organization within the marketplace. This analysis includes
the combination of the resources of the bank and their internal capabilities through which they cover
growth and development in the market and make their goodwill at the marketplace. It has identified that
Commonwealth Bank have number of skilled human resources who are helping organization to provide
quality of financial services to their customers. The internal capabilities of the organization help the
human resources to manage the structure and culture of the workplace which make the better
relationship between the team members and other employees who are working in the Commonwealth
bank (Mohammed, 2018).
Commonwealth Bank also have strong customer base and loyalty which show their core competencies at
the marketplace that help them in the sustainable growth and development in this competitive world.
They have various types of the internal as well as external potentiality which help bank to satisfy their
customer as well as employees who help to gain the market opportunities. They have opportunity to
expand the branches of the Bank in the world to gain more customers and make the brand value more
common in the market through their quality of financial services.
4. Propose a suitable information system solution that meets the chosen company needs
The organization is facing the issue in the management practices as the cost for the operation is higher
than the expectations. The organization has application of the information systems those are software or
database applications usable to store and manage the information for the operational support. For
example, the organization can use the management information system as it can support the
management practices with high standardization.
Management information system is database system used in the organization to generate the reports on
the each level of the business. The organization can use the management information system as
integrated systems. The organization has benefits to improve the communication among the
stakeholders and executives of the business whereas it also can integrate the departments for the
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effective control and performance on the business operations (Laudon and Laudon, 2015). The
organization can improve decision making as the reports generated on the management levels can help
to analyze the capabilities and improve the performance. Also, better understanding can be developed
for the internal structuring and processes. Management information system can help to create the
knowledge base for the organization. Also, data quality issues can be resolved as the management
information systems will help the business to provide the accurate and reliable data to the authenticated
resources (Stair and Reynolds, 2013). The personal and intellectual information of the business can be
managed effectively to achieve the security.
5. Evaluate the proposed system and provide your recommendations
The proposed system for the information management is effective for the organization as it can help the
management to save the time on the operations. The existing manual operations can be reduced whereas
the automation can be achieved. The management information system can support the internal
operations for the easy data availability and security. It can provide the hierarchical data storage and
control to achieve the desired functionality. The system is also capable to meet the competitive benefits
as the modules of the system can generate the reports on the historical data and information collected
from the market. The decision making process can be made more effective and accurate. The
organization can assist the executives to work with the strategic executions and improve the
performance (Laudon and Laudon, 2015). Also, the security is at core to manage the confidentiality of
the data so that it is recommended to use the management information system to ensure the
performance, security and reliability in the information management.
However, the management information system is effective to the organization, but it needs
considerations for the implementation practices. For example, the organization has to ensure the proper
set of the skills and capabilities in the resources to make use of the services. Also, the data management
practices are required to align with the standards to manage the security and confidentiality. The system
is integrated with several modules including marketing, human resources planning and transactions so
that the business has to consider the system for the performance and quality. The initial implementation
might bring the additional cost on the installation and configuration.
Therefore, the organization is recommended to make use of the SAP to handle the most of the business
operations. The organization can use the system to achieve the faster performance and security. It is also
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recommended to prepare and execute the effective strategy for the training of the resources. The
organization also can analyse the multiple variants in the market and select the most suitable tools for
the operational support (Rainer et al, 2013). The authenticated set of users is required to define to
manage the security. The organization is recommended to review and update the software system to
handle the bugs and issues in the operations. It also helps to achieve security and reliability in the
system.
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References
Books and Journals
Braggion, F. and Ongena, S., 2017. Banking sector deregulation, bank–firm relationships and corporate
leverage. The Economic Journal.
E. Dobbs, M., 2014. Guidelines for applying Porter's five forces framework: a set of industry analysis
templates. Competitiveness Review, 24(1), pp.32-45.
Laudon, K.C. and Laudon, J.P., 2015. Management information systems (Vol. 8). Prentice Hall.
Mohammed, K., 2018. What If the USSR Comes Back to Life Once Again?: Measuring CINC Index of
Commonwealth of Independent States (CIS). In Economic and Geopolitical Perspectives of the
Commonwealth of Independent States and Eurasia (pp. 252-268). IGI Global.
Murray, D., Davis, K., Dunn, C., Hewson, C. and McNamee, B., 2014. Financial system inquiry.
Rainer, R.K., Cegielski, C.G., Splettstoesser-Hogeterp, I. and Sanchez-Rodriguez, C.,
2013. Introduction to information systems. John Wiley & Sons.
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.
Schlagwein, D., Thorogood, A. and Willcocks, L.P., 2014. How Commonwealth Bank of Australia
Gained Benefits Using a Standards-Based, Multi-Provider Cloud Model. MIS Quarterly
Executive, 13(4).
Stair, R. and Reynolds, G., 2013. Principles of information systems. Cengage Learning.
Online
About Commonwealth Bank, 2018. About Us [Online] [Accessed Through]
<https://www.commbank.com.au/about-us.html?ei=CB-footer_about-commbank> [Accessed On: 28th
August, 2018]
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Cirnow.com.au, 2018. History of Commonwealth Bank [Online] [Accessed Through]
<https://www.cirnow.com.au/history-of-the-commonwealth-bank/> [Accessed On: 28th August, 2018]
Internal capabilities of Commonwealth, 2018 [Online] [Assessed through]
<https://www.researchgate.net/publication/269035575_How_Commonwealth_Bank_of_Australia_Gain
ed_Benefits_Using_a_Standards-Based_Multi-Provider_Cloud_Model>, [Assessed on 28th August,
2018]
Royalcommission.gov.au, 2018. Some features of Australian Banking sector [PDF] [Accessed Through]
<https://financialservices.royalcommission.gov.au/publications/Documents/some-features-of-the-
australian-banking-industry-background-paper-1.pdf> [Accessed On: 28th August, 2018]
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Strategic Information Systems: A Case Study of Commonwealth Bank of Australia

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